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China exports falter as global demand softens

By Abigail Townsend
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China’s exports slowed markedly in August, official customs data showed on Wednesday, as global demand started to soften.
Exports rose by 7.1% year-on-year in August, compared to 18.0% in July; analysts had been expecting an increase of around 13.0%.

Imports also slowed, to just 0.3% from 2.3% in July. Consensus was for growth of around 1.1%.

The trade balance was $79.39bn, compared to a record $101.26bn in July and a consensus forecast of $92.7bn.

Month-on-month, seasonally adjusted exports fell 6.4% – compared to 0.6% in July – while imports were down 4.8%.

Craig Botham, chief China+ economist at Pantheon Macroeconomics, said: “We have been expecting weaker exports for some time, given the global slowdown evident in other country trade data, with China’s own data distorted by the Omicron lockdown and reopening. Subsidies for exporters have likely also played a role in delaying the inevitable.

“The weakness in imports, meanwhile, reflects the dire state of domestic demand, without which the trade surplus would be falling more rapidly.

“Export data by country reveals a broad based slowdown in August – this was not driven by isolated pockets of demand weakness.”

Michael Hewson, chief market analyst at CMC Markets UK, said: “It is becoming increasingly difficult to feel optimistic about the outlook for the Chinese economy as we head into the winter months.

“With 21.5m people already locked down in Chengdu, and new restrictions being imposed in places like Guiyang, in Guizhou province, as well as Shenzhen, it’s hard to see a scenario for a significant economic pick up much before next year.”

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